A Company Has 33,000 Units of Its Sole Product That

question 67

Essay

A company has 33,000 units of its sole product that it produced last year at a cost of $71 each.This year's model is superior to last year's and the 33,000 units cannot be sold for their regular selling price of $127 each.The company has two alternatives for these items: (1)they can be sold to a wholesaler for $45 each,or (2)they can be reworked at a total cost of $700,000 and then sold for $53 each.The company has enough idle capacity to rework these items without affecting any new production.Which choice would increase the company's profits the most?

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Definitions:

Loanable Funds

The total amount of capital available for borrowing, often used in the context of the market for loans.

Interest Rates

Interest rates are the percentages charged or paid for the use of money on loans or deposits, influencing economic activities like borrowing and investing.

Loanable Funds

The funds available for borrowing, which are determined by the savings and investments in an economy.

Interest Rates

The percentage charged by a lender to a borrower for the use of assets, usually expressed as an annual percentage of the principal loan amount.